Tax Bands for married couple

ianjohn

I am a bit confused now when it come to bands for married couple.

What is 20% and40% band now for 2021 and 2022 ?

With both working and income and what is that per person?

abff

For a single person, the 20% band applies to income up to €35,300 in 2021, with 40% tax on the balance. This band is due to increase to €36,800 for next year.

For a married couple, each can avail separately of the above bands, but one of you can get up to an extra €9,000 at the 20% tax rate.

So, if you are both earning in excess of €36,800 next year (net of pension contributions), you will both pay 40% tax on part of your income. If you both have net income of less than €36,800, neither of you will be subject to 40% on any part of your income.

Where it gets complicated is where one of you earns more than €36,800 and the other earns less than that amount. In that case, the higher paid individual can receive up to an extra €9,000 at the 20% tax rate, but any increase in the higher paid individual’s tax band would lead to a corresponding reduction in the lower paid person's tax band.

So let’s say the higher paid person is earning well in excess of €45,800 (i.e. €9,000 more than the €36,800 single person tax band). If the lower paid person is earning less than €27,800 (i.e. €9,000 less than the €36,800 single person tax band), then that person will be subject to 20% tax on their entire income and the higher paid person will have a 20% tax band of €45,800. But if the lower paid person is earning between €27,800 and €36,800, they will have the 20% rate applied to their entire income, but the increase in the higher paid person’s 20% tax band will be restricted to the difference between €36,800 and the lower paid person’s taxable income.

I hope this clarifies the position, but please feel free to ask any follow up questions.

enfant terrible

https://www.boards.ie/discussion/comment/118335891#Comment_118335891

What would be the best way for a married couple to split if one earns around 43k and the other around 18k?

namenotavailablE

I've a free spreadsheet ('Allocate standard rate band spreadsheet') available at http://taxcalc.eu/monthlyss/ for this type of query.

abff

https://www.boards.ie/discussion/comment/118335914#Comment_118335914

In that case, you would allocate the full additional €9,000 to the higher paid individual.